RI-382

December 8, 2021

SYLLABUS

Michigan attorneys have a duty to report known unauthorized practice of law activity. Whether specific conduct actually constitutes the unauthorized practice of law is determined by the legislature and courts. If a Michigan attorney reasonably believes that an out-of-state attorney is engaging in the unauthorized practice of law, the Michigan attorney should report the activity to the State Bar of Michigan for investigation. Out-of-state attorneys may not practice Michigan law unless permitted by an exception prescribed in Michigan Rule of Professional Conduct (MRPC) 5.5, including provision of “temporary services” compliant with Rule 5.5(c) and practice authorized by law pursuant to Rule 5.5(d). An out-of-state attorney physically located in Michigan, but practicing the law exclusively of a jurisdiction in which the out-of-state attorney is licensed, does not violate Rule 5.5. Michigan attorneys may enter into fee division relationships with out-of-state attorneys if the division of fees complies with the ethical rules of both jurisdictions. With proper safeguards, Michigan attorneys may collaborate with, employ, and own law firms with out-of-state attorneys. If a Michigan attorney is unsure of whether their own conduct when interacting with an out-of-state attorney complies with the MRPC, the Michigan attorney should contact the State Bar of Michigan Ethics Helpline for guidance.

References: MRPC 5.5; RI-101, C-239, JI-26, RI-325, and RI-353. MCL 600.916, MCL 450.681;

TEXT

Attorneys licensed to practice law in Michigan (“Michigan attorneys”) often interact with attorneys who are admitted to practice¹ in a jurisdiction other than Michigan (“out-of-state attorneys”). Michigan attorneys frequently question the ethical implications of such interactions. This opinion seeks to lend guidance on five recurring issues on this subject: 1) identifying and reporting the unauthorized practice of law, 2) referral relationships, 3) employment of and joint firm ownership with out-of-state attorneys, 4) assisting an out-of-state attorney with a Michigan matter, and 5) negotiating with out-of-state attorneys.²

1) Identifying and reporting the unauthorized practice of law

Attorneys and judges have a duty to report the unauthorized practice of law when they have actual knowledge of unauthorized practice of law activity.³ Limiting the practice of law to members of the bar “protects the public against rendition of legal services by unqualified persons.”⁴ A question often asked is whether the specific conduct of an out-of-state attorney is considered the unauthorized practice of law thus requiring the Michigan attorney to report the actions of the out-of-state attorney. Whether specific conduct constitutes the unauthorized practice of law cannot be answered definitively by this committee or the State Bar of Michigan. Only the legislature and courts may answer the legal issue of whether specific conduct constitutes the unauthorized practice of law.⁵ Nevertheless, there are common situations that may cause a Michigan attorney to reasonably believe that the out-of-state attorney is engaging in the unauthorized practice of law. In those situations, the Michigan attorney should report the conduct to the State Bar of Michigan so that the conduct may be reviewed and, if appropriate, investigated.⁶

The State Bar of Michigan has published an Unauthorized Practice of Law Facts & Information pamphlet that lists the following non-exhaustive examples of services that may require a Michigan law license if performed in Michigan or for Michigan residents:

• Drafting documents that require legal judgment for another person.
• Giving advice tailored to the particular legal situation of another person.
• Appearing before courts or acting as intermediaries on behalf of another person regarding the other person’s legal matter.
• Representing the interests of others, or interpreting and applying laws and legal theories to give advice to other persons about the legal implications and consequences of alternative courses of action.
• Representing other persons in court, even if the non-attorney has a power of attorney or is a notary public.

Out-of-state attorneys may not practice Michigan law unless within the confines of MRPC 5.5. If the work is not permitted by MRPC 5.5, the out-of-state attorney is treated as a non-attorney for the purposes of the unauthorized practice of law prohibitions.

Rule 5.5(a) expresses generally that an attorney shall not practice law in Michigan or elsewhere in violation of professional regulatory laws or assist another in doing so. Rule 5.5(b) addresses the core prohibitions on out-of-state attorneys practicing law in Michigan. It provides that absent an exception an out-of-state attorney shall not “establish an office or other systematic and continuous presence in [Michigan] for the practice of law” or “hold out to the public or otherwise represent that the lawyer is admitted to practice law in [Michigan].”

An out-of-state attorney does not violate Rule 5.5(b) by working remotely from a physical location in Michigan, if the out-of-state attorney practices only the law of a jurisdiction in which the out-of-state attorney is licensed. The Covid-19 pandemic caused many attorneys to work remotely, some physically outside of a jurisdiction in which they are licensed. That situation raised the question of whether such attorneys violated Rule 5.5(b). Ethics committees in some jurisdictions, including Florida, Utah, and Maine, have opined that practicing law exclusively of a jurisdiction in which an attorney is licensed, though physically located in a jurisdiction in which the attorney is unlicensed, does not constitute the unauthorized practice of law.⁷ The ABA Standing Committee on Professional Ethics likewise opined in Formal Ethics Opinion 495 that such remote work arrangements are not the unauthorized practice of law. This Committee agrees with the reasoning of those opinions and similarly opines that an out-of-state attorney who is physically located in Michigan, but practices the law exclusively of a jurisdiction in which the out-of-state attorney is licensed, does not violate MRPC 5.5. Out-of-state attorneys must not, however, violate Rule 5.5(b)’s restrictions on establishing an office or presence, or misrepresenting admission to practice, in Michigan.⁸ Those interested in a greater understanding of what is and is not allowed should review ABA Formal Ethics Opinion 495.

MRPC 5.5(c) authorizes an out-of-state attorney to provide “temporary legal services” in Michigan. The comments to MRPC 5.5 do not precisely define “temporary” but provide that the term could include services rendered “on a recurring basis or for an extended period of time, as when the lawyer is representing a client in a single lengthy negotiation or litigation.”⁹

MRPC 5.5(c) describes four scenarios in which an out-of-state attorney may provide temporary legal services in Michigan. First, an out-of-state attorney may undertake the services “in association with” a Michigan attorney.¹⁰ In that situation, the Michigan attorney’s participation must be meaningful. Although the minimum extent of participation is undefined, the comment states that for MRPC 5.5(c)(1) to apply, the Michigan attorney must “actively participate in and share responsibility for the representation of the client.” Thus, the out-of-state attorney must involve the Michigan attorney in more than a nominal way. Equally important, the Michigan attorney must recognize that such association could entail far-reaching accountability to the client generally and, in litigated matters, a court or other tribunal.¹¹

Second, the temporary services may be rendered if they are reasonably related to a pending or potential proceeding before a tribunal in which the out-of-state attorney is authorized to appear, “or reasonably expects to be so authorized.” The “reasonable expectation” of admission suggests that the out-of-state attorney has taken steps to become admitted as required, by actively pursuing the pro hac vice admission process prescribed in MCR 8.126 (or counterpart application to practicebefore the specific tribunal or agency). A privately-held intention, without more, does not suffice.

If the out-of-state attorney reasonably expects pro hac vice admission under MCR 8.126 or an analogous law, the out-of-state attorney may conduct initial investigative actions such as meeting with a client, interviewing witnesses, and reviewing documents. This also extends to subordinate attorneys. It is important to note that the comment to MRPC 5.5 does not address contact with a potential opposing party. Because such activity is unresolved, in order to avoid complicity in the unauthorized practice of law, the committee recommends that Michigan attorneys consider contacting the State Bar of Michigan Ethics Helpline for guidance.

Questions often arise regarding an out-of-state attorney’s participation in alternative dispute resolution prior to litigation. Pro hac vice admission is required in matters to be arbitrated in Michigan. The applicable court rule, MCR 8.126, contemplates pro hac vice admission to appear and practice in “a specific arbitration proceeding in this state,” as well as in a “specific case in a court” and practice “before an administrative tribunal or agency.” Other ADR activities in Michigan require that the out-of-state attorney comply with an exception in MRPC 5.5, even if pro hac vice or similar admission is not expected. The Unauthorized Practice of Law Facts & Information pamphlet includes as an example of the unauthorized practice of law acting “on behalf of another person regarding the other person’s legal matter.”

The third and fourth exceptions in Rule 5.5(c) allow the out-of-state attorney to provide temporary services in Michigan if they are “reasonably related to the lawyer’s practice in a jurisdiction in which the lawyer is admitted to practice.” Subsubsection (3) addresses situations involving “a pending or potential arbitration, mediation, or other alternative dispute resolution proceeding in this or another jurisdiction” where pro hac vice admission is not required. Subsubsection (4) addresses non-dispute resolution situations that are reasonably related to the out-of-state attorney’s practice in a jurisdiction where admitted. The comments to MRPC 5.5 include the following considerations for determining whether the services are reasonably related to the attorney’s practice where admitted:

• Prior attorney-client relationship between the client and out-of-state attorney or the client resides in or has significant contacts with the jurisdiction in which the out-of-state attorney is licensed.
• The matter has a significant connection to the jurisdiction wherein the out-of-state attorney is licensed.
• Significant aspects of the matter may be conducted in the jurisdiction where the out-of-state attorney is admitted or implicate the laws of that jurisdiction.
• The legal issues involve multiple jurisdictions, including the jurisdiction in which the out-of-state attorney is admitted to practice law.
• The out-of-state attorney has recognized expertise in the specific area of law. Examples provided are a “particular body of federal, nationally uniform, foreign, or international law.” Additional resources for guidance on temporary practice are RI-380, Unauthorized Practice of Law Relevant Statutes & Case Law, and Temporary Admission to Practice Law in Michigan.

MRPC 5.5(d) contains additional exceptions based on the nature of the out-of-state attorney’s practice. MRPC 5.5(d)(1) permits in-house counsel to provide legal services to her/hisemployer and/or affiliated entities. This exception, however, does not include services for which pro hac vice admission is required. The comment further clarifies that such counsel cannot render personal legal services to the employer’s officers and employees.

MRPC 5.5(d)(2) allows for the rendition of legal services “that the lawyer is authorized by law to provide in this jurisdiction.” This exception has been interpreted to include two main scenarios. The first is exclusively federal practice, for which the out-of-state attorney does not need a Michigan license. Informal Ethics Opinion RI-353 provides that an attorney “may provide legal services in Michigan and maintain an office here even if the attorney is not licensed to practice in Michigan, as long as that attorney’s practice is limited to federal matters.”¹² The second scenario under MRPC 5.5(d)(2) is for Special Legal Consultants admitted under Board of Law Examiners (BLE) Rule 5(E). A Special Legal Consultant certificate allows attorneys licensed in a foreign country to provide legal advice on matters related to the law of the foreign country where the attorney is admitted. These attorneys will be listed in the State Bar of Michigan Attorney Directory with an indication that the attorney’s license is limited.

By qualifying for the MRPC 5.5(d)(2) exception, the out-of-state attorney may not practice Michigan law generally, and must confine the practice to federal, foreign, or other authorized practice. Otherwise, the out-of-state attorney risks sanctions. For example, in Grievance Administrator v Gbenga Anjorin, 11-119-GA (ADB 2012) and Grievance Administrator v Anand A. Perumallapalli, 06-13-GA (2006), the Special Legal Consultant’s Certificate was revoked for engaging in the practice of law in Michigan state courts, including in domestic relations and criminal matters.

If a Michigan attorney knows¹³ that an exclusively federal practitioner, Special legal consultant, or other specially-authorized out-of-state attorney is practicing Michigan law outside of their authority to do so, the Michigan attorney should report the situation to the State Bar of Michigan.

In all situations, the Michigan attorney must not knowingly assist an out-of-state attorney to violate the ethical rules of the jurisdiction in which they are licensed.¹⁴

2) Referral relationships

An out-of-state attorney may refer a Michigan case to a Michigan attorney. The Michigan attorney may question whether the attorney may ethically enter into a referral relationship with the out-of-state attorney that provides for fee-splitting. Ethics Opinion RI-199 provides that a referral fee may be paid if it comports with the ethical rules in both jurisdictions. Michigan Rule 1.5(e) is comparatively permissive in allowing division of fees between attorneys not in the same firm. The Supreme Court’s opinion in Sherbow v. Fieger,¹⁵ includes an excellent discussion of the evolution and requirements of the Michigan rule. Other jurisdictions’ rules may be more restrictive, requiring either that the referring attorney’s share of the fee approximate that attorney’s participation in the matter, or that the referring attorney assume some form of “responsibility” for the representation. ABA Model Rule 1.5(e) requires client agreement confirmed in writing, and either that the division be “in proportion to the services performed by each lawyer” or that each attorney assume “joint responsibility for the representation.” State rules vary.¹⁶ Thus, where cross-border referrals are involved, Michigan attorneys should study applicable counterpart rule(s) for compliance.

3) Employment of and joint firm ownership with out-of-state attorneys

Michigan attorneys may enter into more long-term law practice relationships with out-of- state attorneys. Two frequent scenarios are:

1. Michigan law firm that conducts business law seeks to hire an out-of-state attorney who is licensed in the immigration courts to perform only immigration legal services to business clients. The out-of-state attorney’s office will be located in Michigan.
2. Michigan law firm seeks to form a partnership with an out-of-state attorney licensed only in Ohio. The in-state attorney would practice only Michigan law and the out-of-state attorney would practice only Ohio law. The law firm would be located in Michigan, near the Ohio border.

Both situations are addressed by Informal Ethics Opinion RI-353, which provides that “a person licensed to practice law in another jurisdiction and not in Michigan may be a director, shareholder, officer, employee, or agent of a Michigan professional corporation engaged in the practice of law.” By reasonable implication, if the out-of-state attorney has an ownership interest in the firm, he or she may also be an employee. A caveat is that safeguards must be put in place to ensure that the public is not misled about the licensure of the out-of-state attorney.¹⁷ For example, the Ohio attorney must not represent that s/he is licensed to practice Michigan law and should include a designation of licensure, such as “*licensed only in Ohio.”

4) Assisting an out-of-state attorney with a Michigan matter

Michigan attorneys are frequently asked to assist out-of-state attorneys with Michigan matters. The nature and extent of a Michigan attorney’s involvement varies, depending on the specific situation and the applicable sections of MRPC 5.5. If called upon to assist an out-of-state attorney with a Michigan matter, a Michigan attorney must analyze MRPC 5.5 to gain an understanding of the requirements for the out-of-state attorney’s participation. This is important not only for the out-of-state attorney’s compliance with applicable rules, but also for the Michigan attorney’s avoiding assistance in the unauthorized practice of law in violation of MRPC 5.5(a). If in doubt about their own conduct, Michigan attorneys should contact the State Bar of Michigan Ethics Helpline for guidance.

5) Negotiating with out-of-state attorneys

Michigan attorneys frequently ask when they may engage in pre-suit negotiations with out-of-state counsel not associated with a Michigan attorney. MRPC 5.5(c) provides that in very limited circumstances discussed above, out-of-state attorneys may engage in the temporary practice of law in this jurisdiction, while MRPC 5.5(d)(2) allows for limited practice “authorized by law.” In engaging in pre-suit negotiations with out-of-state attorneys, Michigan attorneys should inquire whether any of the exceptions to MRPC 5.5(b) apply. If not, Michigan attorneys should consider reporting the circumstances to the State Bar of Michigan.

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1. The comment to MRPC 5.5 clarifies that “admitted to practice” means that the “lawyer is authorized to practice and is in good standing to practice in the jurisdiction in which the lawyer is admitted and excludes a lawyer who, while technically admitted, is not authorized to practice because, for example, the lawyer is on inactive status or is suspended for non-payment of dues.”

2. This opinion focuses on issues arising under the MRPC only, and does not address the requirements of MCR 8.126 (Temporary Admission to the Bar), commonly referred to as “pro hac vice” admission.

3. See RI-101, C-239, and JI-26.

4. Comment to Michigan Rule of Professional Conduct (MRPC) 5.5.

5. Dressel v Ameribank, MCL 600.916, and MCL 450.681.

6. RI-325.

7. The Fla. Bar re Advisory Opinion—Out-of-State Attorney Working Remotely from Fla. Home, 318 So.3d 538 (Fla. 2021); Utah Ethics Opinion 19-03 (2019); Maine Ethics Opinion 189 (2005).

8. To avoid establishing an office or other impermissible professional presence in Michigan, an out-of-state attorney should refrain from providing Michigan contact information on websites, letterhead, and business cards, and avoid offering legal services in Michigan. ABA Formal Opinion 495, pp. 2-3.

9. The committee interprets the term “recurring” to mean occasional, though infrequent, similar representations. Otherwise, the “temporary” legal services could become “systematic and continuous” in violation of Rule 5.5(b). As discussed below, the pro hac vice rule limits such admissions to five “within a 365-day period.” MCR 8.126(A).

10. MRPC 5.5(c)(1).

11. While there are no Michigan authorities explaining the meaning of “active participation,” other jurisdictions that have addressed the issue have reached a range of conclusions. Cf., Attorney Grievance Commn v. Lang, 461 Md. 1; 191 A.3d 474 (2018) (lawyer who provided legal advice, drafted and signed the complaint, exchanged numerous emails with client(s), signed all of the pleadings, and reviewed letters “actively participated” in the matter); HSBC Bank USA v. Cline, Civil Action No. 2:13-cv-00978, 2013 WL 5775362, at *2 (S.D. Ohio Oct. 25, 2013) (“active participation” requires only that the in-state lawyer take “final responsibility for the pleading, motion or brief”); Gsell v. Rubin & Yates, LLC, 41 F. Supp. 3d 443, 448 (E.D. Pa.2014) (citing Bilazzo v. Portfolio Recovery Assocs., 876 F. Supp. 2d 452, 464 (D. N.J. 2012)) (following a five-factor test to distinguish whether the lawyer actively participated or merely “consulted”: (1) having no direct contact with any client; (2) having limited contact with opposing counsel; (3) neither signing nor drafting a substantial portion of the pleadings and motions; (4) participating only by “reviewing motions, preparing memos, editing documents, discussing litigation strategy ... and conducting legal research”; and (5) “record[ing] only a modest number of hours” as compared to lead counsel); Disabled Patriots of Am., Inc., 2006 WL 449152, at *4 (Active participation requires “more than 1.5 hours of work expended reviewing the Complaint and Settlement Agreement, drafting one letter, and participating in a twenty-minute phone conference”); Jonathan B. Brown, Two Approaches to the Modern Reality of Temporary Cross-Border Legal Practice: the United States and the European Community, 70 S.C. L. Rev 319, 329-330 (2018).

12. See also Desilets v Delta Home Improvement Inc, 291 F3d 925 (6th Cir 2002).

13. “Know” “denotes actual knowledge of the fact in question. A person’s knowledge may be inferred from circumstances.” MRPC 1.0, Comments.

14. MRPC 8.4(a).

15. L Offs of Jeffrey Sherbow, PC v Fieger & Fieger, PC, 507 Mich 272 968 NW2d 367, reh'g denied; 961 NW2d 490 (Mich 2021).

16. See ABA Formal Opinion 474 (2016), n.3 (recognizing a “wide variation in state adoptions of Model Rule 1.5(e)”). While they all require that the overall fee be reasonable, counterpart rules in neighboring jurisdictions contain meaningful distinctions regarding the requisite manner of client consent and, where the fee division is disproportionate to the services provided, the degrees of “responsibility” that must be assumed by a participating attorney: Indiana Rule 1.5(e) requires client agreement confirmed in writing, and that “the division is in proportion to the services performed by each lawyer or each lawyer assumes joint responsibility for the representation”; Illinois Rule 1.5(e), requires client agreement confirmed in writing, and that the fees be in proportion to each lawyer’s services or, if the work is to be performed primarily by a referred lawyer, that “each lawyer assumes joint financial responsibility for the representation”; Wisconsin Rule 20:1.5 mandates the client’s signed written consent to the terms of the referral arrangement, and that the division be proportional to the services rendered by each lawyer, or if the matter is a referral arrangement, that each lawyer assume “the same ethical responsibility for the representation as if the lawyers were partners in the same firm”; Ohio Rule 1.5(e) imposes four requirements, including the client’s written consent to the fee division after full disclosure, and that the division of fees be in proportion to the services to be performed by each lawyer or that each lawyer assume joint responsibility for the representation.

17. MRPC 7.1.